posted at 9:31 am on January 14, 2013 by Allahpundit

Skip to 3:00 for an instant classic of the last-days-of-the-republic genre, as a Nobel prize winner scolds a comedian for not taking the idea of a magical coin seriously enough. I joked last week after Colbert’s bit on the coin that if Stewart ended up goofing on it too, that’d be the coup de grace for liberal/media opinion. Lefty pundits seemed to sense that as well: Krugman wasn’t the only commentator to post something grouchy on Friday about Stewart having misunderstood what the coin was supposed to do. Is that right, that he didn’t understand it? Or was he just trying to steer them away from a political disaster in the making a la saner liberals like Ezra Klein?

Minting the coin would interrupt that process, uniting Republicans — and many voters and business groups — against what they would see as an unsettling, illegal and inflationary power grab from the executive. And if you think the press spreads blame too equally over the debt ceiling, wait till you see the coverage if the White House decides to respond by creating a trillion-dollar coin out of nothing. You can explain the basic logic of fiat currency until you’re blue in the face, but it’s not going to matter. That coin would drive our country’s increasingly deranged politics, which are really at the heart of this crisis, to the edge.

I think that minting the coin could go quite badly, while the debt-ceiling fight would likely end quite well, with Republicans finally admitting they’re not willing to allow default. And forcing the Republican Party to accept a more normal approach to politics is, in the end, the main objective. That doesn’t mean Washington will enter an Edenic period of cooperation and compromise. Republicans would probably just content themselves with threatening more ordinary government shutdowns. But that itself would be a real advance.

Stewart’s core brand, remember, is “sanity,” so this was a heavy lift for coin fans twice over. You can’t wave an idea this goofy in front of a comic sensibility, even a lefty one, and not expect it to bite. It literally doesn’t pass the laugh test.

The coin really would be like the Emperor’s New Clothes in that it would be worth a trillion dollars only as long as everyone went along with the belief that it was worth a trillion dollars. But given how much of our debt is owned by foreign governments and individuals, just because Paul Krugman or the Obama White House says our debt ceiling problem is solved because we have a trillion dollar coin in the back doesn’t mean they have to believe our credit’s still good because we have a trillion dollar coin in the bank.

Stewart’s doing the Democrats a favor by ridiculing this to the point the idea becomes dead and impossible to resurrect, while Krugman’s ego and hatred for his ideological opponents really makes him believe if his side points at a chicken and calls it an elephant, that makes it so.

And forcing the Republican Party to accept a more normal approach to politics is, in the end, the main objective.

Notice that even while these hypocrites are complaining about partisan politics… they still manage to include some partisan insults.

Newsflash for Ezra: It’s the SPENDING, stupid. Branding your political opponents as somehow ‘abnormal’ while continuing to ignore the fact that our current spending is UNSUSTAINABLE is what’s crazy. So, if you’re going to try to be the poster-boy for Sanity… next time, bring some along.

Welcome to KrugmanDebate.com, your headquarters for the Murphy-Krugman Debate! Robert Murphy has a PhD in economics from New York University. He is a firm believer in the Austrian theory of the business cycle, which blames the boom-bust cycle on the Federal Reserve, not the free market. In contrast, Paul Krugman–Nobel laureate in economics, and writer for the New York Times—is a Keynesian economist who thinks the Fed and the government can jumpstart the economy out of recession by printing more money and increasing the deficit.

Murphy has challenged Krugman to a public debate on Austrian vs. Keynesian business cycle theory. He has set up a campaign, which currently has raised $60,000 in pledges. If Krugman actually debates Murphy, then the money goes to a food bank in New York City. If Krugman never debates, no one’s credit card is ever charged; people are only going to be charged for their pledge, when Krugman actually debates.

I think that minting the coin could go quite badly, while the debt-ceiling fight would likely end quite well, with Republicans finally admitting they’re not willing to allow default. And forcing the Republican Party to accept a more normal approach to politics is, in the end, the main objective. That doesn’t mean Washington will enter an Edenic period of cooperation and compromise. Republicans would probably just content themselves with threatening more ordinary government shutdowns. But that itself would be a real advance.

At $1600 per ounce, a trillion dollar platinum coin would weigh 19,532 tons and be almost half the size of the Washington monument.

WyattsTorch on January 14, 2013 at 10:22 AM

The trillion-dollar-coin people don’t want the coin to be made out of a trillion dollars’ worth of platinum. A quarter isn’t made of 25 cents’ worth of copper and nickel, and a hundred-dollar-bill isn’t made of $100 worth of paper and ink, either. They’d be fine with the coin containing an ounce of platinum or less, as long as it has “United States of America — One Trillion Dollars” imprinted on it.

I would like to know if the trillion-dollar coin would be equivalent, in inflationary terms, of printing 10 billion hundred-dollar bills. My understanding is that it would be inflationarily equivalent, and the only reason people like Krugman want to use a coin is that there is a statute which allows the Secretary of the Treasury to have platinum coins minted in any denomination, whereas Treasury can’t just print paper money without the cooperation of the Federal Reserve.

I would like to know if the trillion-dollar coin would be equivalent, in inflationary terms, of printing 10 billion hundred-dollar bills. My understanding is that it would be inflationarily equivalent…

Krugman is such an idiot economist, that he doesn’t even understand the basic foundations of an economy. Minted coins or dollars are only worth something if all parties agree to it and recognize it as being of value. While HE may be dumb enough to accept a coin at face value, regular Americans (even liberals) understand there is something blatantly wrong with a “trillion dollar coin”. Minting a “trillion dollar coin” would completely destroy any trust in the value of our currency, prompting a massive increase in straight bartering or alternate forms of currency (like ammo).

He is a firm believer in the Austrian theory of the business cycle, which blames the boom-bust cycle on the Federal Reserve, not the free market. In contrast, Paul Krugman…

Dante on January 14, 2013 at 10:18 AM

Dante, NEVER make definitive statements about The Ferret. It’s obvious that you’re not familiar with his record, which is “if you don’t like what I’m saying now, stick around for a while and watch me do a 180…”

Krugman on the role of the Fed in the boom-bust cycle:

“The fact is, all these promises are silly: Administrations don’t cause recession and recoveries–if anyone is in charge of the business cycle, it’s the nonpartisan technocrats at the Federal Reserve.”

And forcing the Republican Party to accept a more normal approach to politics is, in the end, the main objective.

In short, we are all supposed to stop pointing out the fallacies in policies based on progressive dogmas, theories, and “feelings”, and just agree to whatever fantasy they are pushing at any given moment. Even or especially if it directly contradicts their fantasy of five minutes ago.

Somehow, I suspect Kipling’s Gods of the Copybook Headings will be profoundly unmoved by Krugman’s definition of “normal politics”.

But Ezra still manages to slip in the “Republicans need to admit that they won’t let us default” line of attack, which is so much manure. There is zero possibility of default under any scenario, as debt service has first priority over revenues, and revenues are more than sufficient to cover debt service.